Abu Dhabi: An Arab Success Story
06/06/2011 12:43 pm EST
The oil-rich sheikdom has so far avoided the turmoil shaking other Middle Eastern states, and is diversifying into tourism and environmental engineering, writes Mark Mobius, executive chairman of Templeton Emerging Markets Group.
Over the past few months, the world’s attention has been focused on the tensions in the Middle East and North Africa. No doubt, these events can often be distressing, sometimes have a high personal cost, and in many cases can have an influence on the international landscape.
However, I’d like to turn your attention to one of the few areas in the region that, so far, has not seen major crises—Abu Dhabi.
Abu Dhabi is the capital of the United Arab Emirates (UAE), a federation of seven emirates including Dubai. The UAE’s combined economy is large for its relatively small size—it has a population of around 5 million, of whom 1.6 million live in Abu Dhabi.
Per capita gross domestic product (GDP) in the UAE is more than $40,000, and that number is significantly higher for Abu Dhabi, mostly because of the incredible earnings from oil and gas. Each day, Abu Dhabi produces more than 2 million barrels of oil, and its oil reserves are now estimated at nearly 98 billion barrels, the sixth largest in the world.
It is interesting that this oil-and-gas driven economy is taking major strides forward in improving its energy conservation and environmental awareness. The emirate plans to build an entire environmentally efficient city, called Masdar City.
The city has an innovative design to combat the hot desert environment in an ecologically sound way, and most of the commercial and manufacturing facilities within the city will specialize in environmentally friendly products. Public transit will be the favored mode of transportation, while automobiles will be banned—a rather surprising switch in this fuel-driven economy.
Masdar will also have a sustainable, zero-carbon, zero-waste ecology, and will rely entirely on renewable energy sources such as solar, wind, geothermal, and hydrogen—another unusual development in a country where more conventional forms of power are so easily available.
The city’s university will be assisted by the world-renowned Massachusetts Institute of Technology (MIT), so I look forward to tracking the interesting technological developments that may come out of this futuristic city’s environment ethos.
It was inspiring to see Abu Dhabi’s forward-thinking mentality in action in Masdar City. Perhaps it is only fitting that the Intergovernmental Panel on Climate Change (IPCC) chose to hold its 33rd session in Abu Dhabi in May 2011.
Developing tourism is another way Abu Dhabi’s government is trying to diversify away from its dependence on oil and gas as a revenue stream. The government has spent a significant amount of money and effort to develop its cultural offerings—which, to my mind, could well approach world-class standards.
For example, the new cultural district being developed on Saadiyat Island, in cooperation with major museums around the world such as the Guggenheim and Louvre, will house the world’s single largest concentration of premier cultural institutions.
Top architects from around the world, including Jean Nouvel, Norman Foster, Zaha Hadid, Frank Gehry and Japan’s Tadao Ando, have been hired to make the district one of the most spectacular in the world. Once completed, Saadiyat Island and its collection of museums could potentially become a huge tourist draw.
The country was already well on its way to excel in spectacular buildings, such as the Sheikh Zayed Grand Mosque, the resting place of the nation’s founding father, which is one of the world’s largest mosques and attracts both pilgrims and tourists.
In my opinion, it is one of the most beautiful buildings in the world, with crystal chandeliers from Austria, marble from Italy, Greece, and China, intensely blue and red calligraphy tiles from Turkey, domes covered in 24-carat gold, and a huge floor area entirely covered with a carpet handmade in Iran (the largest of its kind in the world).
Another strong tourist draw is motor racing, for which the Abu Dhabi government has developed a Formula 1 racing track and a Ferrari theme park. Ferrari World was opened in November 2010 under a spectacular 2.2 million square foot roof, making it the world’s largest indoor amusement park.
As we were leaving, I realized that Abu Dhabi, with all its existing wealth in natural resources, is also truly a pioneer in new initiatives with its emphasis on the environment and tourism. Within the emirate, we are currently finding opportunities in sectors such as transportation, banking and construction.
[The WisdomTree Middle East Dividend ETF (GULF) allocates nearly 23% of current assets to the United Arab Emirates, while the Gulf States Index ETF (MES) parks 21% of its holdings in the country. The former lists the Emirates NBD Bank among its top holdings, while the latter owns National Bank of Abu Dhabi and Abu Dhabi Commercial Bank. Global X has filed registration papers for an all-UAE ETF—Editor.]